E6-6 Realized Profit on Intercompany Sale LO 6-3

Planet Corporation acquired 90 percent of Saturn Companys voting shares of stock in 20X1. During 20X4, Planet purchased 50,000 Playday doghouses for $31 each and sold 35,000 of them to Saturn for $37 each. Saturn sold all of the doghouses to retail establishments prior to December 31, 20X4, for $52 each. Both companies use perpetual inventory systems. Required: a. Prepare the journal entries Planet recorded for the purchase of inventory and resale to Saturn Company in 20X4. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

b. Prepare the journal entries Saturn recorded for the purchase of inventory and resale to retail establishments in 20X4. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

c. Prepare the worksheet consolidation entry(ies) needed in preparing consolidated financial statements for 20X4 to remove all effects of the intercompany sale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)